ANALYTICAL TOOLS IN PRODUCTION ECONOMICS

G. F. Ortmann

Agrekon, 1989, vol. 28, issue 01

Abstract: Some of the major mathematical programming techniques that have been developed since the application of linear programming in farm planning during the early 1950s are evaluated. Most of these models have attempted to incorporate risk, with varying degrees of success. Quadratic programming (QP) is restricted by limited availability of suitable algorithms. MOTAD is computationally efficient and provides acceptable solutions compared with those derived using QP. Utility-efficient programming appears to have considerable potential. Of the safety-first models, Target MOTAD seems to be the most useful. Game theory models may lead to farm plans which are conservative. Risk-efficient Monte Carlo programming may be useful when the distribution of risk is non-normal or utility is not quadratic and when a farmer's risk aversion is not known. Models accounting for stochastic input-output coefficients and constrained resources have also been attempted but required relatively large matrices. Goal programming attempts to include farmers' multiple objectives in the objective function. Development of appropriate software for personal computers should be a high priority.

Keywords: Production Economics; Research Methods/Statistical Methods (search for similar items in EconPapers)
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267231

DOI: 10.22004/ag.econ.267231

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